Real Estate Consultant · Waldorf, MD · Member since 2016 · 24 posts · 1 vote
I know a friend of the family that inherited his mother's house after her passing away and now, years later, he is on the verge of losing the house due to defaulting on property tax. No tax lien has been placed on the house yet but I believe I'm in a perfect position to capitalize on this before the bank takes action. As a new investor, I don't know what the options would be for me or him. Any advice???
It typically takes five years of delinquent payments before the county will auction a property. Most tax collectors are willing to set up payment plans and anyone can pay the taxes, it doesn't need to be the owner of the property.
The most obvious option is to offer to purchase it from them directly. Since they don't need to market it, you would save on Realtor and marketing fees. Because you know they are in a tough spot, you can help keep them from losing the property altogether, while potentially getting a good deal for yourself.
Another option is to offer to catch them up on taxes in exchange for a percentage of ownership in the property. And since they are in a tight spot, I would ask for a generous percentage. For example, if the amount of delinquent tax is 5% of the current property value, I might ask for a 10% or 20% ownership in the property. Of course, I am assuming there are no other liens or debts against the property which could put your investment at risk. Be sure to have a contingency plan or agreement for how future unpaid taxes would be resolved since they could continue to expect you to pay the taxes. Also be sure that you are protected if they decided to mortgage the property.
To find out the timeline and amount of tax due, your best course of action is to contact the local tax collector. It might be helpful to locate the parcel number prior to calling. Here is the site for yuba county. You might also check the upcoming auction list. http://www.co.yuba.ca.us/Departments/Treasurer/auc...
I know a friend of the family that inherited his mother's house after her passing away and now, years later, he is on the verge of losing the house due to defaulting on property tax. No tax lien has been placed on the house yet but I believe I'm in a perfect position to capitalize on this before the bank takes action. As a new investor, I don't know what the options would be for me or him. Any advice???
Can't seem to tag you so please see my post above.
@Kevin Franklin you mentioned a bank and property taxes. Is a bank involved? Is there a mortgage on the property in addition to the taxes due? If the taxes are due there is a lien on the property. It is automatic the day the taxes are one day late. The taxes have to be paid for the property to transfer.
Al you have to do is agree on a price (or other creative terms as @Carrianne Mucho mentioned) write up a contract and give it to an escrow company. The escrow company will handle the settlement of the property and see all bills due are paid.